Marine insurance is an integral part of the world economy because it protects people who work in the shipping and maritime businesses. Marine insurance covers many boats and activities, from fishing and cargo ships to yachts and pleasure boats.
A marine policy protects against damage or loss to cargo or goods while moving from one place to another. Marine insurance is essential if you own a ship cargo or run a marine business. It helps you manage risk and protect your capital.
Features of Marine Insurance
- The insurance protects the company financially in case something goes wrong.
- It helps you handle risks and run your business without stress
- It makes up for any money the business loses while the things are being shipped.
- Lower the risk of package theft through
- To get more cases of containers that get lost at sea every year
Types of Marine Insurance
Before buying boat insurance, you should learn about the different types to pick the one that best fits your needs. Here are some different kinds of boat insurance:
1. Insurance for Marine Cargo
Cargo owners risk having their goods mishandled at the port and while the ship is at sea. It’s also possible that your goods have been lost, damaged, or moved around. Marine cargo insurance is available for a reasonable monthly fee.
It protects the cargo owner from losses in value caused by such events. It comes with third-party liability protection that protects the port, ship, railroad track, other cargo, people, and any damage your cargo may cause to those things.
2. Hull and Machinery Insurance
The stern is its primary support if a ship doesn’t have masts. This means that hull insurance covers the insured if something wrong happens with the ship. It’s something that ship owners often do. It would help if you bought hull and machinery insurance to protect the ship’s gear.
The insured person is protected against damage to the ship’s electrical, mechanical, and operational gear. The insurance company calls it “Hull and Machinery Insurance” because both parts cover the whole ship.
3. Liability Insurance
The ship could be in a crash, accident, or pirate attack. This puts the expensive cargo in a lot of danger. Also, the lives of the crew and other people on the ship are in danger. If the ship owner has the right risk insurance, they won’t have to pay for any problems out of their control.
4. Insurance for Freight
This part talks about the loss of freight. The shipping company won’t be responsible if the goods get lost or broken or if the ship goes missing. This protection can help them get their money back after their loss.
Types of Insurance Policies
Below are the types of insurance policies and their benefits:
Floating Policy
Large importers may choose an open policy, also called a blanket policy, instead of getting insurance for each shipment separately. This is subject to the Marine Insurance policy.
An open policy is a one-time insurance covering all orders made during the agreed-upon time, usually a year.
The seller might have to report regularly (like once a month) all the shipments that happened during that time, including the types of goods sent, how they were transported, where they were sent, and so on.
Voyages Policy
You can get a certain policy for just one lot or shipment. Every time an exporter sends a package abroad, they must buy insurance. The downside is that every time a seller sends a package, they must put in more work and time. Shipments are immediately insured when policies are open but not when policies are closed.
Time Policy
In marine insurance, time coverage is usually given for a year. One can issue for more than a year, or they can stretch to finish a particular trip. But it’s usually for a set amount of time. Indian marine insurance only lets you get a time cover once a year.
Mixed Policy
The Voyage and Time policies are both parts of the Mixed policy.
Named Policy
In marine insurance, a named policy is one of the most popular types of coverage. The insurance document says that the policy was given in the ship’s name and lists it.
Policy on Port Risk
This is the rule that ships must follow to stay safe while they are in port.
Fleet Policy
One insurance covers several ships that belong to the company or owner. It can cover even old ships, which is a plus. This rule is also based on time.
Policy for a single-vessel
Marine insurance policies for a single sailboat only cover one boat.
Blanket Policy
When someone buys this insurance, they must pay the most money possible to cover everything.
What is Covered Under Marine Insurance?
The following are some of the most common places where boat insurance covers:
- Full defence against loss
- Sinking, being stuck, fire, and blast
- A lightning strike or an earthquake
- Unexpected costs for administration
- Loss of cargo while loading or unloading
- Putting trash or washing overboard
- Unnatural events
- Accident, crash, toppling, or derailment
- Average in most ways
Things not Covered by Marine Insurance
The following are some of the most common places where boat insurance does not cover:
- The insured did something on purpose.
- Leaks of liquid, expected loss of weight or volume, or normal wear and tear on the covered item.
- Packing is not enough or suitable for the job.
- The thing that is guaranteed has a flaw or nature that comes with it.
- Goods being late
- Owners, managers, charterers, or operators of the ship not paying their bills on time.
- Not suitable or seaworthy for the conveyance
Principles of Marine Insurance
For a marine insurance deal to be correctly carried out, both the insurer and the insured must follow these five rules:
The Principle of Good Faith
According to this basic rule, both sides of an insurance deal must act in good faith toward each other. The information they give about the terms and conditions of the deal must be clear and to the point.
Principles of Indemnity
This concept only covers how bad the loss is, so the insured can’t get more than what the loss is thought to be. The goal is to ensure the insured is in good standing before the guarantee.
Principles of Causa Proxima
The closest or most nearby reason is another name for Causa Proxima. This rule is used when a loss is caused by more than one event. The insurance company has to figure out what caused the loss. This will help figure out how much the harm cost.
Principles of Insurable Interest
The person who owns the policy must be interested in the thing or person he wants to protect. It means that the insured must make some gains that can be insured and must also lose if there is an accident or loss.
The Principle of Minimizing Loss
This concept says that the owner of a property must do what they need to do to lower the loss to the insured property. The fact that the property is covered means the owner can’t be careless or irresponsible.
How Does Marine Insurance Work?
A marine insurance contract shifts the responsibility for the goods from the parties and any middlemen involved to the insurance company. From the start, the people who handle the goods are not legally responsible for much.
An exporter can buy an insurance policy that covers the goods against any loss or damage that might happen to them before they are sent abroad.
If the things get damaged or lost while they’re in transit, the carrier might have to pay for it, but most of the time, they only pay “per package” or “per consignment.” Since this is the case, the insurance may not cover the total cost of the shipped things. This is why exporters wait to ship their goods until an insurance company has covered them.
Marine insurance is needed to meet the terms of an export deal. To follow deals like Cost Insurance And Freight (CIF) or Carriage And Insurance Paid (CIP), the exporter needs to get marine insurance to protect the interests of their bank or buyer and keep their end of the deal when things are Delivered Duty Unpaid (DDU) or Delivered Duty Paid (DDP), the seller does not have to insure them, but most of the time they do.
Conclusion
In conclusion, marine insurance is essential for businesses and people who do activities on the water to protect their finances. Marine insurance is an essential part of the shipping and maritime business worldwide. There is a chance of losing money, and this helps international trade and commerce by giving businesses the safety they need to work in the often unpredictable marine environment.
